CCE Vs. BHILOSA INDUSTRIES PVT. LTD.

JUDGEMENT

(1.) THESE stay/miscellaneous applications and appeals have been filed by the appellants M/s. Garden Silk Mills Ltd. (GSML for short), M/s. Bhilosa Industries Pvt. Ltd. (BIPL for short) and M/s. Wellknown Synthetic Pvt. Ltd. (WSPL for short). The issues involved in all these applications/appeals is that the appellants are availing the benefit of Nil rate of duty as per Sr. No. 6 of Notification No. , dt. 09.07.2004, as amended. All the three appellants have the facilities of manufacturing Partially Oriented Yarn (POY for short) in their other units and are also undertaking the processes like texturising/draw twisting etc on POY in another factory of the appellants where benefit of Notification No. 30/2009 -CE is availed i.e. the activities of manufacturing POY and its subsequent processing are done in different factories of the appellants. It is the case of Revenue in these proceedings that the appellants are not entitled to the benefit of exemption under Sr. No. 6 of Notification No. as all these appellants are having the facilities of manufacturing POY in factory/factories situated elsewhere. Shri M. Chandrasekharan (Sr. Advocate), Shri Willingdon Christian (Advocate) and Shri S. Sunil (Advocate) appeared on behalf of the appeals related to GSML; Shri V. Sridharan (Sr. Advocate), Shri Anand Nainawati (Advocate) and Shri Mahesh Raichandani (Advocate) appeared on behalf of the stay/misc. applications and appeals related to BIPL; and Shri Prakash Shah (Advocate) and Shri D.H. Mehta (Advocate) appeared on behalf of the stay applications/appeals related to WSPL.

(2.) SHRI M. Chandrasekharan (Sr. Advocate) appearing on behalf of his clients argued that GSML have got 3 factories situated at Jolwa and Vareli. That factories of GSML situated at Jolwa are separately manufacturing POY and draw twisted Polyester Filament Yarn (PFY for short) and the third factory situated at Vareli is manufacturing, inter alia, draw wrap yarn. That all the 3 factories were earlier registered separately with the Central Excise Department. That subsequently, all the three separately registered factories were given a common registration as requested by his appellant and it was ordered by the Revenue that GSML will maintain separate records of production and clearance of excisable goods from the respective factories and that a single consolidated CENVAT/PLA account will be maintained for the purpose of discharging duty payments. That subsequently GSML requested for separate registration which was not allowed by the lower authorities but the order of lower authorities was appealed against and by an order dt. 12.04.2005, Commissioner (Appeals) set aside the order passed by the Deputy Commissioner holding that GSML will be eligible for separate registrations for the 3 factories situated at different locations. That Revenue filed appeal against the Commissioner (Appeals)'s order before CESTAT Ahmedabad, who vide its order upheld the order passed by the first appellate authority regarding separate registration to each factory. That Revenue filed a Tax Appeal No. 1665/2009 against the order of CESTAT Ahmedabad which was dismissed by Gujarat High Court by order dt. 10.09.2009. That Revenue did not accept the order passed by Gujarat High Court and agitated the issue before the Apex Court by moving a SLP which was dismissed by the Apex Court on 15.03.2010. That Revenue was not acting upon the order dt. 02.05.2008 passed by CESTAT Ahmedabad and on an application of GSML in a subsequent order dt. 19.06.2009, CESTAT directed the Revenue to implement the earlier order of CESTAT and provide separate registrations within a period of one month. That only on a specific order passed by CESTAT, for granting separate registration to 3 factories and reporting compliance by 24.09.2009, that Revenue granted them separate registrations to his clients as 3 separate factories. Regarding the admissibility of Notification No. , dt. 09.07.2004, Ld. Advocate argued that the words his factory mentioned in Sr. No. 6 of Notification No. will only mean as the same factory where exempted processes are being carried out on POY manufactured by GSML. It was his case that when the intention of legislature is to mean any other factory/factories of the manufacturer, then specific words are so used to give specific expression as given in notifications like Notification No. 24/95 -CE and Notification No. 8/2003 -CE, where the expressions no proprietary interest in any factory or from one or more factories of the manufacturer have been used. That in the case of Notification No. such words are not used, therefore, the words his factory in Notification No. have to be only read as the same factory where the exempted processes are being undertaken. It was also argued by ld. Advocate that it has been wrongly interpreted by the adjudicating authority that the concept of Singular includes Plural of the General Clauses Act 1987 will be applicable to the words his factory used in Notification No. . It was also argued by the Ld. Advocate that the word manufacturer has not been defined under Section 2(f) of Central Excise Act 1944 but has to be construed in the context of the word manufacture in common parlance as defined under Section 2(f) of the Central Excise Act 1944. That the word factory as defined in Section 2(e) of Central Excise Act 1944 has to be read along with the definition of manufacture given in Section 2(f) of the Central Excise Act and will mean only the same factory of the manufacturer. That in the case of this appellant, all the units were treated as different factories as per the proceedings which terminated in the Apex Court. With respect to time bar nature of the demand and imposition of penalty it was argued by the Ld. Advocate that appellant was earlier availing the benefit of Notification No. 6/2000 -CE where rate of duty on the same activities carried out by this appellant was fixed at rate of Rs. 2.5 per kg and Notification No. 6/2000 -CE was also using the words his factory and an independent texturiser. That as this appellant was availing the benefit of similarly worded exemption notification, therefore, there was a bonafide belief that the words his factory used in Notification No. only meant the same factory where the exempted processes are being done. That the fact of availing Notification No. 6/2000 -CE was also shown by his appellant in the periodical returns filed with the Revenue.

(3.) SHRI Prakash Shah (Advocate) appearing on behalf of the appellant in appeals relating to WSPL argued that WSPL is having 5 units situated at geographically different locations. That exemption is being availed with respect to only those units/factories in which there is no facility for manufacturing POY. He borrowed the arguments made by ld. Sr. Advocate Shri V. Sridharan appearing on behalf of BIPL. It was also argued that the processes of manufacture and clearing the goods from various factories for captive consumption were known to the Department and his client were filing periodical returns/valuation declarations and Revenue was well aware of the activities being undertaken in different factories. Secondly, it was argued that the Revenue itself has given separate registrations for each manufacturing activity to be undertaken in each factory. That when separate registrations are given by Revenue regarding type of goods manufactured, then extended period can not be invoked and penalties are not attracted on his clients in these proceedings. It was also his case that where two interpretations of an exemption notification are possible then that interpretation going in favour of the assessees should be adopted.